Supreme Court Upholds Constitutionality of Pecuniary Jurisdiction in Consumer Protection Act, 2019: Rutu Mi Hir Panchal & Ors. vs. Union of India & Ors. (29 April 2025)

Introduction

Date of the Judgment: 29 April 2025

Judges: Pamidighantam Sri Narasimha, J., Manoj Misra, J.

Does basing the jurisdiction of consumer courts on the value of goods and services purchased, rather than the compensation claimed, violate the Constitution? The Supreme Court of India recently addressed this question, examining the constitutional validity of key sections of the Consumer Protection Act, 2019. The court considered challenges to the Act’s provisions that determine the pecuniary jurisdiction of district, state, and national consumer commissions based on the consideration paid for goods and services, rather than the compensation sought by the complainant.

The bench, comprising Justice Pamidighantam Sri Narasimha and Justice Manoj Misra, delivered the judgment. This blog post summarizes the key aspects of the case, including the background, legal arguments, and the Supreme Court’s decision.

Case Background

The case involves two scenarios: a writ petition and a civil appeal, both challenging aspects of the Consumer Protection Act, 2019.

In the writ petition, the petitioner’s husband purchased a Ford Endeavour Titanium car for Rs. 31.19 lakhs. Tragically, the vehicle caught fire on 20 November 2018, resulting in the husband’s death. Subsequently, the petitioner filed a consumer complaint before the District Consumer Commission, Vadodara, seeking compensation of Rs. 51.49 crores plus interest. The petitioner argued that under the repealed Consumer Protection Act, 1986, she could have directly approached the National Commission based on the compensation claimed, but the new law compelled her to approach the District Commission.

In the civil appeal, the appellant’s husband, a District Governor of the Lions Club of Jhansi, passed away due to COVID-19 on 25 July 2020. The appellant sought Rs. 14.94 crore from Lions International Club based on an insurance policy that promised up to two million dollars in compensation to families of deceased members. The National Commission rejected her petition, stating that the consideration for the insurance policy did not exceed Rs. 10 crores, which is the threshold for the National Commission’s jurisdiction under the 2019 Act.

Timeline

Legal Framework

The core issue revolves around the shift in determining pecuniary jurisdiction under the Consumer Protection Act. Here’s a comparison between the 1986 Act and the 2019 Act:

The 2019 Act changed the basis for determining pecuniary jurisdiction from the value of compensation claimed to the value of consideration paid for the goods and services.

Arguments

Arguments by the Petitioners/Appellants:

• ✓ Anomaly in Pecuniary Jurisdiction: The new law creates an anomaly where a person claiming high compensation for a product with a low purchase price must approach the District Commission, while someone with a lower compensation claim for an expensive product can approach the National Commission.
• ✓ Discrimination: The new criteria are discriminatory because consumers claiming identical compensation are treated differently based on the consideration they paid for goods or services.
• ✓ Definition of Consumer: Section 2(7) of the 2019 Act defines “consumer” broadly, without discriminating based on consideration paid. Restricting access to judicial remedies based on consideration is arbitrary.
• ✓ No Rationale: There is no logical reason for the new criterion. If the goal was to curb exaggerated claims, the pecuniary limits of the forums could have been increased instead.

Arguments by the Respondents (Union of India):

• ✓ Legislative Competence: Parliament has the authority to determine the jurisdiction and pecuniary limits of courts and tribunals.
• ✓ Reasonable Classification: The provisions are based on a reasonable classification. The value of goods and services paid as consideration creates a clear distinction and has a rational connection to the goal of timely and effective settlement of consumer disputes.
• ✓ Prevention of Exaggerated Claims: The new provisions prevent exaggerated and inflated claims.

Issues Framed by the Supreme Court

The Supreme Court addressed the following key issues:

1. 1. Whether Sections 34, 47, and 58 of the Consumer Protection Act, 2019, prescribing pecuniary jurisdictions based on the value of goods and services paid as consideration, are constitutional.
2. 2. Whether these provisions are discriminatory and violate Article 14 of the Constitution.

Treatment of the Issue by the Court

The following table demonstrates how the Court decided the issues:

Authorities

The court considered the following authorities and legal provisions:

• ✓ State of Bombay v. Narottamdas Jethabhai, (1950) SCC 905 (Supreme Court of India): Discussed the legislative competence to prescribe jurisdiction and powers of courts.
• ✓ State of West Bengal v. Anwar Ali Sarkar, (1952) 1 SCC 1 (Supreme Court of India): Articulated the twin test for determining whether a law violates the equality norm.
• ✓ Nandita Bose v. Ratanlal Nahta, 1987 AIR 1947 (Supreme Court of India): Held that a court or tribunal has jurisdiction to assess or reassess an overvalued or undervalued claim.
• ✓ Yash Developers v. Harihar Krupa Co-operative Housing Society Ltd. & Ors., 2024 INSC 559 (Supreme Court of India): Considered the need for performance audit of a statute.
• ✓ Lifecare Innovations Pvt. Ltd. v. Union of India, 2025 INSC 269 (Supreme Court of India): Emphasized the significance of statutory and administrative bodies in achieving the purpose of legislation.
• ✓ Section 2(7) of the Consumer Protection Act, 2019: Defines “consumer.”
• ✓ Sections 34, 47, and 58 of the Consumer Protection Act, 2019: Prescribe pecuniary jurisdictions of district, state, and national commissions.
• ✓ Entry 95 of List I, Entries 11-A and 46 of List III, Article 246 of the Constitution: Deals with the legislative competence of Parliament.
• ✓ Section 2(h) of the Indian Contract Act, 1872: Defines contract.
• ✓ Section 2(e) of the Indian Contract Act, 1872: Defines agreement.
• ✓ Section 2(d) of the Indian Contract Act, 1872: Defines consideration.
• ✓ Section 2(b) of the Indian Contract Act, 1872: Defines promise.
• ✓ Section 2(a) of the Indian Contract Act, 1872: Defines proposal.
• ✓ Recovery of Debts and Bankruptcy Act, 1993, Section 1(4): Prescribes that the provisions of the Act shall not apply where the amount of debt is less than 10 lakh rupees.
• ✓ Insolvency and Bankruptcy Code, 2016, Section 4: Provides that Part II of the Code is applicable where the minimum amount of default is Rs. One Crore.
• ✓ Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, Section 31(h): Provides that the Act shall not apply for securing repayment of any financial asset not exceeding Rs. 1 lakh.
• ✓ Legal Services Authority Act, 1987, Section 22(c)(1): Provides that the permanent Lok Adalat shall not have jurisdiction in matters where the value of the property in dispute exceeds 10 lakh rupees.

Judgment

What weighed in the mind of the Court?

The Supreme Court’s decision was influenced by several key considerations:

• ✓ Legislative Competence: The Court emphasized that Parliament has the legislative competence to enact the Consumer Protection Act, 2019, and to prescribe the pecuniary jurisdiction of courts and tribunals.
• ✓ Reasonable Classification: The Court found that the classification based on the value of goods and services paid as consideration is a reasonable one, with a direct nexus to the object of creating a hierarchical structure of judicial remedies.
• ✓ Prevention of Exaggerated Claims: The Court acknowledged that the new provisions aim to prevent exaggerated and inflated claims, which can overburden the National Commission.
• ✓ No Loss of Judicial Remedy: The Court clarified that there is no loss of judicial remedy, as consumers can still claim compensation, and access to the State or National Commission is not taken away.
• ✓ Performance Audit: The Court recognized the need for a performance audit of the Consumer Protection Act, 2019, to assess its impact and effectiveness.
• ✓ Statutory Authorities: The Court highlighted the importance of the Central Consumer Protection Council and the Central Consumer Protection Authority in achieving the objectives of the Act.

The Supreme Court’s reasoning followed a structured approach:

Issue: Constitutionality of Sections 34, 47, and 58 of the Consumer Protection Act, 2019

Logical Reasoning:

Parliament’s Legislative Competence ✓

↓

Classification Based on Consideration Paid ✓

↓

Rational Nexus to Object of the Act ✓

↓

No Violation of Article 14 ✓

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Sections 34, 47, and 58 are Constitutional

The Court considered arguments against the constitutionality of the provisions, such as the potential for discrimination and the anomaly in pecuniary jurisdiction. However, it rejected these arguments, emphasizing that the classification based on consideration paid is reasonable and has a direct nexus to the object of the Act.

The decision was reached by a bench of two judges, with both Justice Pamidighantam Sri Narasimha and Justice Manoj Misra concurring. There were no dissenting opinions.

Key quotes from the judgment:

• ✓ “Parliament has the legislative competence to prescribe jurisdiction and powers of courts. This power extends to prescribing different monetary values as the basis for exercising jurisdiction.”
• ✓ “Vesting jurisdiction in the district, state or national commission on the basis of value of goods or services paid as ‘consideration’, is neither illegal nor discriminatory.”
• ✓ “The Central Consumer Protection Council and the Central Consumer Protection Authority shall in exercise of their statutory duties under sections 3, 5, 10, 18 to 22 take such measures as may be necessary for survey, review and advise the government about such measures as may be necessary for effective and efficient redressal and working of the statute.”

Key Takeaways

• ✓ The Supreme Court upheld the constitutionality of Sections 34, 47, and 58 of the Consumer Protection Act, 2019.
• ✓ The pecuniary jurisdiction of consumer commissions will be determined based on the value of goods and services paid as consideration, rather than the compensation claimed.
• ✓ The Central Consumer Protection Council and the Central Consumer Protection Authority are crucial for the effective functioning of the consumer protection regime.

Directions

The Supreme Court directed the Central Consumer Protection Council and the Central Consumer Protection Authority to take measures for the effective and efficient redressal and working of the statute.

Development of Law

The ratio decidendi of the case is that the pecuniary jurisdiction of consumer commissions can be constitutionally determined based on the value of goods and services paid as consideration. This reaffirms the legislative competence of Parliament and clarifies the scope of Article 14 in the context of consumer protection laws.

Conclusion

In summary, the Supreme Court upheld the constitutionality of key provisions of the Consumer Protection Act, 2019, affirming that the determination of pecuniary jurisdiction based on the value of goods and services is valid and non-discriminatory. The Court also emphasized the importance of statutory bodies like the Central Consumer Protection Council and the Central Consumer Protection Authority in ensuring effective consumer protection.